Tokenizing Real Estate

Yesterday I drove to Miami for a seminar on the Tokenization of Real Estate. It was hosted by DigiShares (https://digishares.io/).

The concept is to fractionalize real estate and have the ownership of “shares” in the property as tokens on a blockchain. This has the potential to democratize real estate investing. One of the speakers discussed being able to own shares for as little as $100 USD.

Digishares provides the platform and the blockchain for accomplishing this. But it’s much more involved due to the unique nature of each property. You need a legal team, a tech team, and a marketing team. The rules are written into the code of the blockchain and the tokens, making it more efficient when it comes time to pay dividends or divest, with less or no oversight by humans. 

They did provide use cases including:

Thesis Hotel in Miami -  https://blog.stomarket.com/tokenizing-the-thesis-miami-case-study-859e6a7f4a50

St. Regis Aspen - https://coincentral.com/real-estate-tokenization-why-stephane-de-baets-is-tokenizing-the-st-regis-aspen/

Mrya Park in Texas - https://www.businesswire.com/news/home/20210921005496/en/MarketSpace-Capital-and-DigiShares-Partner-to-Tokenize-A-250-Unit-Active-Older-Adult-Housing-Development-in-Dallas-Texas.

I like the concept, and it seems to work for larger projects. But when the panel was asked questions by the audience, we learned that the minimum to do a tokenization process for a project is $250,000. That takes out a lot of smaller projects.

My lingering question is:  would it be easier to raise $10M from a smaller group of, say 10 people at $1M each; or $1,000 from 10,000 people?

The statistics they provided on the investments that companies like Alphabet, Black Rock, and Morgan Stanley are making into blockchain and tokenization were impressive.

At the DealBook Summit in November of 2022, CEO of Blackrock, Larry Fink

"The next generation for markets, the next generation for securities, will be tokenization of securities, (including real estate).

On tokenization “Think instant liquidation of bonds and stocks (real estate), without a middleman, we will reduce fees further. Changing the entire ecosystem.”

Considering he is the largest asset manager in the world, this carries weight.

There were 5 members on the panel. I intend to reach out to each one of them to either meet or have a call to discuss this topic more. 

Chip Bulloch / Founder and CEO www.CryptoIntelX.com